Minnesota business indicators up in December

Key indicators of Minnesota’s manufacturing climate in December showed growth for the first time since midsummer, something that could mean more job growth in the state.

The state’s manufacturers scored a 52.3 in December’s Mid-America Business Conditions Index, a monthly Creighton University survey of supply managers that tracks the Midwest’s business climate. That number is up 5.8 points from November, when the state’s manufacturing industry dropped to its lowest point on the index in 2016. December’s score is also a big leap over December 2015, when Minnesota sat at 39.4.

Index values below 50 signal a shrinking economy. Scores above 50 suggest economic expansion in the coming six months. For the nine states in the study, the index rose to 53.1 from November’s 46.5. The improvement ended a five-month streak in which the index showed negative growth.

Besides Minnesota, the index includes Arkansas, Iowa, Kansas, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Creighton economist Ernie Goss said the improvement will be good for Minnesota’s 2017 jobs picture.

“Based on our survey results, I expect the state to add another 15,000 jobs for the first half of 2017 for an annualized job growth of 1 percent, approximately equal to the state’s long-term average,” he said in a news release accompanying the index.

Two improvements that stood out for the month came in new orders and production lead times, said Kirby Sneen, vice president of the Golden Valley-based Manufacturers Alliance. He said a number of the organizations told him they made a year-end push on purchases, either because they had cash on hand from a good year, or were seeking to put needed expenses on 2016’s tab because they had a bad year.

“When things are flat, manufacturers usually wait for the next year,” Sneen said in an interview.

Minnesota manufacturers have improved their lead times by choosing local suppliers over those located overseas, Sneen said. That can cut weeks off bringing products to market.

“You don’t have products essentially sitting on a ship for eight weeks,” he said.

The overall national picture was better as the country’s manufacturers continued a three-month growth trend with an index score of 53.2.

Minnesota’s score hit a 2016 index peak of 54.3 in May. Its top score on the index during the past five years, 70.1, came in June 2014.

Only one state in the index, Oklahoma, registered a December index score of less than 50. Missouri had the highest score at 57.1.